Europe's Economic Crisis Claims Political Victims

Aug 15, 2011

Europe's economic problems are having real political consequences.

A declining euro and government austerity measures have set off regular rounds of street protests and even riots. Political parties in Portugal and Ireland have been ousted from power this year. Spain seems likely to change governments in early elections called for November, while leaders in France, Italy and Greece remain at risk.

French President Nicolas Sarkozy even cut short his summer vacation to race back to Paris and deal with the financial crisis. British Prime Minister David Cameron also rushed home from his holiday, though the immeidate cause was rioting in London.

"There's just this general nervousness," said Stephen Flanagan, senior vice president of the Center for Strategic and International Studies. "The feeling that all the leaders in Europe are on vacation and had to come back."

Signaling A Lasting Shift

Europe's economic problems are so wide-ranging and deep that analysts are wondering whether, aside from the short-term upheaval, the euro crisis will trigger a lasting shift in Europe's political outlook and the role it plays in the world.

Even before the most recent crisis, there were questions about Europe's ability to share responsibility with the United States when it came to promoting Western values such as democracy and free-market capitalism. But those questions are being raised with a new urgency today.

Some worry that if the Western nations turn inward to deal with issues of economic decline, they will not only play a smaller role on the world stage, but appear less attractive as a model for developing nations.

"Europe's decline is not just economic – it's a crisis in leadership," says Damon Wilson, vice president of the Atlantic Council, which promotes U.S. engagement with its transatlantic partners. "If Europe isn't able to step up, it's going to have a direct impact on what we're able to do in the world as well."

Lacking Capacity

Complaints about Europe failing to pull its weight in military and diplomatic terms date back decades. "The trends have been there for 20 years," says James Goldgeier, the dean of international service at American University. "We've been concerned for the entire post-Cold War period in terms of what Europe is capable of doing."

But Goldgeier says ongoing European cuts to defense and foreign aid have the potential to "exacerbate" such concerns.

At his farewell speech to NATO in June, outgoing U.S. Defense Secretary Robert Gates complained that some European members of the alliance were shirking their responsibilities.

Gates said there was an "unacceptable" split "between those willing and able to pay the price and bear the burdens of alliance commitments, and those who enjoy the benefits of NATO membership... but don't want to share the risks and the costs."

He also noted that some nations failed to participate in the Libyan intervention not because they lacked the will, but because they simply didn't have the military capacity,

NATO's engagement in Libya revealed that, as a fighting force, Europeans rely heavily on American firepower, intelligence and other resources. And, while NATO members still have 25,000 soldiers stationed in Afghanistan in addition to the U.S. forces, one by one the European powers have been pulling their troops.

"Many of these countries are going to become increasingly less relevant military actors," says Wilson, the Atlantic Council official. "These are our go-to partners. We're not going to do much unilaterally on the world stage, yet our partners are going to be taking themselves out of the game if they stay on this path."

Withdrawing From The World?

Many European nations have slipped below the old NATO standard of spending 2 percent of their GDP on defense. Severe budget problems are leading to cuts not only to the militaries but to Europe's traditionally generous foreign assistance programs.

"They are in this deep, deep crisis that gets worse every day and they don't have any money for defense," says AU's Goldgeier.

While funding for international affairs is coming down, economic problems also mean that European leaders are more likely to devote their time and attention to domestic matters, at the expense of crises overseas.

And Europe's retrenchment comes at a time when U.S. policymakers are considering the first serious defense cuts since the terrorist attacks of 2001.

Not Caring Enough

Since World War II, the U.S. has kept Europe under its defense umbrella, with tens of thousands of troops – and lots of nuclear weapons – stationed in Germany and elsewhere.

"It's this concern that I have, that Europeans are compromising their security by not being willing to help out the U.S.," says Jan Techau, director of the Carnegie Endowment for International Peace's European Center in Brussels. "This little price that the Americans ask for helping the Europeans out, to put it bluntly, this is the little price they won't be willing to pay."

As the Pentagon ponders where to cut, Europe's seeming withdrawal may make it harder for President Obama or future administrations to make the argument that U.S. interests demand a strong presence there.

If the Europeans aren't willing to pay for their own defense, some will wonder, why should the U.S. fill that gap?

"It's much more difficult to make a case in the U.S. why the U.S. should be present in Europe," Techau says. "They need Europe to give a little bit so they can make the case at home about why this is so important, but the Europeans just don't give a damn about this."

Surrendering Global Influence

On both sides of the Atlantic, the combination of heavy debts, political weakness and economic turmoil could ore reduce the traditional influence of the wealthy nations of the West.

"We've forfeited our claim to the top spot, due to what we've just gone through," Damon Wilson of the Atlantic Council says. "Many folks out there across the globe no longer will look to the West for global leadership. I fear that's the conclusion being reached in capitals across the globe."

The idea that the U.S. and Europe can dictate to, say, the nascent democracies of the Arab world that they should follow a certain 10-step process for building up their economies is going to become less "viable," says Flanagan, of CSIS.

Like many observers, Flanagan worries that the debt and defense problems of Europe and the U.S. could create a big opening for China to spread its influence.

Not All Bad News

But Flanagan cautions that such concerns can be easily overstated. China's economy remains much smaller than that of the U.S., and it faces serious political and demographic challenges of its own. "There's a danger of saying the West is toast, we're done and China and others are going to eat our lunch," he says.

Europe may be undergoing quite a bit of political change just now – but that's what's expected to happen in democracies. Several European governments have found renewed popularity through their handling of the debt situation, notably in the Scandinavian and Baltic countries.

European defense analysts hope that the silver lining of smaller defense budgets might help push through long-standing reform ideas, like moving from 27 national defense academies within European NATO countries to three or four.

But the larger worries remain – that Europe will not provide adequately for its own defense or be able to join with the United States in promoting Western democratic values around the world.

"If we really are going to champion values like political and economic freedom," Goldgeier says, "we better be able to show that we actually can deliver."

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